Saint John anxiously awaits province's answer on LNG tax repeal

Political leaders in Saint John are growing increasingly nervous about a sudden silence from the Gallant government on how, or if, it plans to repeal a multi-million dollar property tax concession at the Canaport LNG property owned by Irving Oil Ltd.

"I go to check the mailbox everyday to see if something's there," said Saint John Mayor Don Darling.

"We're anxious to have a letter back."

Saint John rushed an official letter to the province two months ago explaining how it would like to see the LNG tax deal carefully unwound 15 years ahead of schedule.

The letter was requested by the provincial governmenton a short deadline in April but has since gone unanswered.

Darling saidhe does not know what to make of the non-response.

"That would be pure speculation," said Darling.

"We haven't had any feedback in terms of what we proposed."

Saint John councilvoted in early December to ask the provincial governmentto repeal legislation that freezes municipal property taxes on the LNG site at $500,000 per year until 2031, well below the $8.02 million it would owe otherwise.

Province wants financial protection

OnApril 7,the Gallant government formally responded and said it would agree to Saint John's request on one condition that the city had toabsorb any financial losses suffered by the province from any future negative financial consequences created by repealing the law.

• Saint John requests repeal of Canaport LNG tax deal
• Gallant government willing to repeal CanaportLNG tax deal

The provincial governmentthen gave the city less than four weeks to respond.

The city hurried a study into what those financial consequences might be and then rusheda counter proposal to the province onMay 3.

It saidit hasheard nothing since.

It makes us think what's going on?- Gerry Lowe, Saint John councillor

Coun.Gerry Lowe, one of the original backers of cancelling the tax concession, saidit is disappointing how slowly the issue has been moving, especially after the provincial governmentdemanded the city move quickly.

"It's been two months and we've heard nothing," said Lowe.

"I was hoping it would be done in this session. It makes us think what's going on?"

No discussion until fall

On Wednesday,Government House Leader Rick Doucet said there are no plans to deal with Saint John's request until sometime later this year.

"It's something that we'll probably be having some discussion on in the fall," said Doucet.

"We''re running out of time in the session right now.It's something we'll be talking about in the fall."

Last winter, Liberal cabinet minister Donald Arseneault criticized Saint John for waiting until December to make its request to the province, saying the city should have known the tax deal would have to be repealed beforeNov. 30for it to take effect the following year.

But Doucet said it is now unclear if the provincial governmenthas left itself enough time to draft and pass repealing legislation by the end of this year, if that is the decision it comes to.

"I'm not sure," he said.

Saint John moved to end the tax deal following a series of reports by CBC News showing Irving Oil has been collecting US$12.25 million per year in rent on the property the LNG development sits on.

The province's worry with repealing the tax concession is that its own assessment on the LNG property, which it values at $299.5 million, might be grossly overvalued.

That could result in the assessment crumbling in the face of an aggressive appeal by Irving Oil after the tax deal is dissolved and the province doesn't want to have to refund any money if that happens.

The city has proposed the tax deal be dissolved and all the new money generated be placed in a trust fund until all appeals of the property's assessed value are heard and settled. The city says any refunds found to be owing, if any, could be paid from the trust fund.